[Ant]

So, I'm a new college graduate that's been DYING for a new Camaro. I can finally get a great deal on a stock one my dealer has, and it's pretty much the exact one I want and more.

I'm trying to keep my payments as low as possible and the only money I have to put down would be the $3500 toward the taxes. I don't have any extra to put down on the car itself.

For the sake of keeping payments low, I was thinking of doing an 84 month loan from PenFed at 2.99% APR and maybe refinancing in the future.

Bad idea or should I just go for it?

[MovieGuy]

Only you, knowing your own situation, can decide if it is a good or bad idea. Keep in mind you pay most of your interest toward the beginning of the loan. And the car will be depreciating faster than you are paying on it. You will be upside down in your payments for about 3 years or so (that means owing more than the car is worth). For this reason don't do this without gap insurance. Also this could possibly make refinancing in the future difficult. If you did this, rather than refinancing, I would suggest just paying more aggressively when you can afford to do so.
If you are planning on keeping the car long term this is more palatable than it is if you are wanting to trade in 5 years. The biggest thing is will the payments put a strain on your finances? 7 years is a long time to be living paycheck to paycheck. And by the time the car is paid off it won't be worth much. But, again, if you are planning on holding onto the car for 10 or 15 years it is more palatable. There are those who say "you will always have a car payment". I went for a lot of years with no car payment and it is nice. I probably should have continued without one but I wanted a brand new car for my retirement. But I digress, the decision is ultimately yours, but hopefully I gave you some things to think about.

[Scottlake]

Originally Posted by Ant

So, I'm a new college graduate that's been DYING for a new Camaro. I can finally get a great deal on a stock one my dealer has, and it's pretty much the exact one I want and more.

I'm trying to keep my payments as low as possible and the only money I have to put down would be the $3500 toward the taxes. I don't have any extra to put down on the car itself.

For the sake of keeping payments low, I was thinking of doing an 84 month loan from PenFed at 2.99% APR and maybe refinancing in the future.

Bad idea or should I just go for it?

Well, Are you going to be okay with being severely upside down for the first 5 years of the loan? So upside down that if you have to get out of the car/or get bored with it in 3 years.

If you know, KNOW, you're going to keep it that long, than ok. But if not, not a good idea.

Scott

[samsumon]

Originally Posted by Ant

So, I'm a new college graduate that's been DYING for a new Camaro. I can finally get a great deal on a stock one my dealer has, and it's pretty much the exact one I want and more.

I'm trying to keep my payments as low as possible and the only money I have to put down would be the $3500 toward the taxes. I don't have any extra to put down on the car itself.

For the sake of keeping payments low, I was thinking of doing an 84 month loan from PenFed at 2.99% APR and maybe refinancing in the future.

Bad idea or should I just go for it?

I stopped reading there.

I was DYING for a new car when the new Camaro was released in I think 2008. I was graduating Highschool then. I THOUGHT I could afford the car then, again in 2012, again in 2015..... I'm glad I waited until now to buy one.

Do not purchase the car.

[samsumon]

Originally Posted by MovieGuy

Only you, knowing your own situation, can decide if it is a good or bad idea. Keep in mind you pay most of your interest toward the beginning of the loan. And the car will be depreciating faster than you are paying on it. You will be upside down in your payments for about 3 years or so (that means owing more than the car is worth). For this reason don't do this without gap insurance. Also this could possibly make refinancing in the future difficult. If you did this, rather than refinancing, I would suggest just paying more aggressively when you can afford to do so.
If you are planning on keeping the car long term this is more palatable than it is if you are wanting to trade in 5 years. The biggest thing is will the payments put a strain on your finances? 7 years is a long time to be living paycheck to paycheck. And by the time the car is paid off it won't be worth much. But, again, if you are planning on holding onto the car for 10 or 15 years it is more palatable. There are those who say "you will always have a car payment". I went for a lot of years with no car payment and it is nice. I probably should have continued without one but I wanted a brand new car for my retirement. But I digress, the decision is ultimately yours, but hopefully I gave you some things to think about.

When is it a good time to thinks about refinancing a car?

[cellsafemode]

I would shelve this as a bad idea.

[MovieGuy]

Originally Posted by samsumon

When is it a good time to thinks about refinancing a car?

Not often. Only if there is a way to get a huge reduction in your interest rate. It has to be big because you pay most of your interest toward the front end of the loan, so even with a fairly significant lower rate, you might be paying the same amount of interest or more going to the lower rate than you would paying off what you have. That is why I suggest just paying more aggressively rather than refinancing. In my response I was assuming he was wanting to shorten the term in the future.

I did refinance my Mustang 2 weeks after I bought it because I found a loan that cut my interest in half. With the original loan I would have paid $3900 over the course of the loan, with the new loan I would have paid $2300 over the term of the loan. I cut 6 months off the term while keeping my payments the same size. In that case it was a good idea to refinance.

[Raven87]

Originally Posted by samsumon

When is it a good time to thinks about refinancing a car?

It depends on your financial situation most of all and also about the refinancing details.

As a rule, unless you refi for any reason other than dropping your interest rate, it is usually best to just pay off the original loan as fast as you can. The more cash you can put against the principal is that much less that interest gets levied against the loan. But if you have a stupidly high interest rate initially (first time borrower, low credit score, etc) sometimes it makes sense to refinance if it truly DOES save you money.

To refi just to get a lower payment sometimes makes sense as above, but usually you end up adding length to the loan which in the end often adds more interest in total (unless the rate drops too). You might have a 72 month loan and are into it for the first 24 months; if you refi for more than another 48 months, you are adding payments which can be very detrimental.

Too many variables to say 'You should refinance when X happens' - it really comes down to your own financial situation.

Remember - borrow the least amount you have to at the lowest rate available for the shortest period of time to generate a payment you can live with. A new Camaro is not a necessity - housing, groceries, medical care, and utilities are.

Be smart with what you borrow.

[leadfoot93]

Very bad. I would open up a new savings account, and start saving. Walk into the dealer in a few years with a nice deposit and get a 36-60 month then. Anything over 60 month you are asking for trouble and will be upside down.

[Raven87]

Originally Posted by MovieGuy

Not often. Only if there is a way to get a huge reduction in your interest rate. It has to be big because you pay most of your interest toward the front end of the loan, so even with a fairly significant lower rate, you might be paying the same amount of interest or more going to the lower rate than you would paying off what you have. That is why I suggest just paying more aggressively rather than refinancing. In my response I was assuming he was wanting to shorten the term in the future.

I did refinance my Mustang 2 weeks after I bought it because I found a loan that cut my interest in half. With the original loan I would have paid $3900 over the course of the loan, with the new loan I would have paid $2300 over the term of the loan. I cut 6 months off the term while keeping my payments the same size. In that case it was a good idea to refinance.

THIS ^^^ was a good move.

[Raven87]

To answer the OP's question about whether an 84 month loan is bad, no, it is not necessarily a bad deal. It depends on the interest rate most of all.

For example - if you borrow $30,000 for 84 months at 2.99%, the payment is ~$397/month. Total interest paid over the life of the loan is ~$3300.

If you borrowed that same amount for only 60 months at 1.99%, the payment jumps up to ~$526/month but your total interest paid out drops to less than half of the 84 month loan - ~$1550. But remember - your monthly payment is still over $125/month higher.

As many have said, if you are going to keep the car at lest 3-4 years and if the interest rate is decent and you are still able to save for an emergency fund (which should be at least 6 months of living expenses), then it's not a bad idea necessarily.

It's just better to borrow the least amount you have to for the shortest period of time at the lowest possible interest and still have a monthly payment that you can live with.

Only YOU know that answer.

[Glen e]

Not only that, but you are way, way out of warranty by month 60, usually one thing startsvto go bad on most cars, at least a few items; condensers, AC stuff, transmission, big ticket items.

Think about a large quality extended warranty if you do it.

[DenverTaco07]

Have you actually been approved for the 84 month at 2.99% or are they advertising that? You probably need 750+ credit score for that, maybe you do IDK.

Why would you refinance a 2.99% rate? that's pretty good, unless you are going to refinance in 3 years to a new 3 year loan and cut a year off the maturity or you can get a .9% or something - but I don't think you will find that low a rate on a refinance.

7 years is a long time, right out of college, you are young but do you want to get married, buy a house etc. in the next 7 years? If not, go for it, if you think those things are in the plans you may want to think twice.

I guess it also depends on your job prospects, what field are you in and what is a conservative estimate of your earnings potential over the next few years. I mean if you have a teaching degree (I know it sucks, but they just don't get paid that much) vs. you have a law degree from harvard or an engineering degree from MIT, then helz ya do it!

[bybcous]

Geico offers a extended warranty with your insurance policy mine is about 20 dollars extra a month for both of my 2016 cars. You have to do it before you hit 1 year on vehicle and before I think 15k miles. I would do it, two weeks after hitting 30 a few weeks ago I found out I have a tumor, while its possibly benign(just did mri), it made me realize how short life can be. On the other hand I would not personally take this loan because you will always be way upside down on your loan.